Housing Subsidies and Work Incentives in Great Britain.

The relationship between housing costs, wages and transfer programmes is complex and yet plays an important part in determining the incentive to work for individuals in low income or high housing cost households. While it is true that many individuals who are in these categories are out of the labour force (retired, sick and disabled), there are many who are not and whose incentive to seek work, or to work harder if already in work, could be modified by directly changing the rent levels they face or indirectly via changes to the structure of programmes designed to subsidize housing for the poor. Here we estimate a static discrete choice labour supply model which allows for housing benefit programme participation. We use samples of 42491 married women and 13340 unmarried women drawn from Great Britain Family Resources Surveys 1994/5-97/8. We find that women are quite responsive to labour supply incentives, housing benefit income has similar incentive effects to earned income which suggests any "stigma" is small. Our analysis is complemented by simulating housing benefit and direct rent subsidy reforms.LABOUR ; HOUSING ; COSTS

The labor supply effect of in-kind transfers

We estimate a model of labor supply and participation in multiple programs for UK lone mothers which exploits a reform of in-work transfers. Cash entitlements increased but eligibility to in-kind child nutrition programs was lost. We find that in-work cash and in-work in-kind transfers both have large positive labor supply effects. There is, however, a utility loss from program participation which is estimated to be larger for cash than for child nutrition. This implies that the partial cash out of the in-kind benefits reduced labor supply.

There's no such thing as a Free Lunch: Altruistic parents and the response of household food expenditures to nutrition program reforms

Many countries provide extensive in-kind public transfers for specific needs of particular client groups such as the elderly, the disabled, and children. However, this may crowd out private expenditures on the goods in question and, to some extent, undermine the case for not simply giving cash. If the target group belongs to a larger household the mechanism behind this crowding out could be either altruism or agency. This paper is concerned with three nutrition programmes for children in UK households: free lunch at school for children from poor households; free milk to poor households with pre-school children; and free milk at day-care for pre-school children in attendance regardless of parental income. We exploit a reform that removed eligibility to the first two programs from working poor households. We find significant crowding-out of private food expenditures – a free school lunch reduces food expenditure by around 15% of the purchase price of the lunch, and a free pint of milk reduces milk expenditure by about 80% of the market price. We conclude that this is due to altruism rather than agency problems because milk expenditure crowd-out is similar across milk programs that have different delivery mechanisms.In-kind transfers, program participation, altruism, agency

The Labor Supply Effect of In-Kind Transfers

We estimate a model of labor supply and participation in multiple programs for UK lone mothers which exploits a reform of in-work transfers. Cash entitlements increased but eligibility to in-kind child nutrition programs was lost. We find that in-work cash and inwork in-kind transfers both have large positive labor supply effects. There is, however, a utility loss from program participation which is estimated to be larger for cash than for child nutrition. This implies that the partial cash out of the in-kind benefits reduced labor supply.labor supply, program participation, in-kind transfers

Welfare and the Returns to Education: The Interaction between Welfare, Work and Wages in the UK

This paper is concerned with the relationship between education, wages and working behaviour. The work is partly motivated by the sharp distinction in the literature between the returns to education and the effect of wages on labour supply. Education is the investment that cumulates in the form of human capital while labour supply is the utilization rate of that stock. Yet, variation in education is usually the basis for identifying labour supply models - education is assumed to determine wages but not affect labour supply. Moreover, it is commonly assumed that the private rate of return to education can be found from the schooling coefficient in a log-wage equation. Yet, the costs of education are largely independent of its subsequent utilisation but the benefits will be higher the greater the utilisation rate. Thus the returns will depend on how intensively that capital is utilised and we would expect that those who intend to work least to also invest least in human capital. Indeed, the net (of tax liabilities and welfare entitlements) return to education will be a complex function of labour supply and budget constraint considerations. Here we attempt to model the relationship between wages, work, education and the tax/welfare system allowing for the endogeneity of education as well for the correlations between the unobservable components of wages and working behaviour. We use the estimates to simulate the effect of a new UK policy designed to increase education for children from low-income households.welfare programmes, labour supply, returns to education

The Intergenerational Transmission of Employers in Canada and Denmark

The intergenerational transmission of employers between fathers and sons is a common feature of labour markets in Canada and Denmark, with 30 to 40% of young adults having at some point been employed with a firm that also employed their fathers. This is strongly associated with the first jobs obtained during the teen years, but for four to about six percent it also refers to the main job in adulthood. In both countries the transmission of employers is positively associated with paternal earnings, rising distinctly and sharply at the very top of the father's earnings distribution, and has implications for the intergenerational transmission of earnings. Mobility out of the bottom has little to do with inheriting an employer from the father, while the preservation of high income status is distinctly related to this tendency. These findings stress that child adult outcomes are related to the structure of labour markets, and underscore the role of resources parents have – though information, networks, or direct control of the hiring process – in facilitating the job search of their children.intergenerational mobility, job search, equality of opportunity

The Effect of School Class Size on Post-Compulsory Education: Some Cost Benefit Analysis

This paper is concerned with the relationship between class size and the student outcome – length of time in post-compulsory schooling. Research on this topic has been problematic partly because omitted unobservables, like parents’ incomes and education levels, are likely to be correlated with class size. Two potential ways to resolve this problem are to exploit either experimental or instrumental variation. In both cases, the methods require that the variation in both class size and the outcome should not be contaminated by other unobservable factors that affect the outcome – like family background. An alternative approach, which we pursue here, is to take advantage of variation in class size between siblings which allows unobservable family effects to be differenced out. Our aim is to combine sibling differences with a fuzzy rule that determines class size to provide estimates of the effect of class size and use these to conduct an evaluation of the costs and benefits of a reduction in class sizes.class size, regression discontinuity, sibling differences

Flexicurity, Wage Dynamics and Inequality over the Life-Cycle

We investigate the relationship between life-cycle wages and flexicurity in Denmark. We separate permanent from transitory wages and characterise flexicurity using membership of unemployment insurance funds. We find that flexicurity is associated with lower wage growth heterogeneity over the life-cycle and greater wage instability, changing the nature of wage inequality from permanent to transitory. While we are in general unable to formally test for moral hazard against adverse selection into unemployment insurance membership, robustness checks suggest that moral hazard is the relevant interpretation.unemployment insurance, wage dynamics, wage inequality, wage instability

Achieving Human Rights for People who Lack Capacity

This is the text of the Lydia Sinclair Memorial Lecture delivered by William Bingley at the November 1999 conference "Mental Incapacity. New Millennium - New Law"